ASC 340-952
Franchisors
340 Other Assets and Deferred Costs
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ASC 340-952 formerly contained the franchisor-specific guidance on deferred costs (for example, direct and indirect costs of franchise sales). Every paragraph in the subtopic — Sections 05, 15, and 25 — was superseded by ASU 2014-09 (Revenue from Contracts with Customers). Franchisors now account for costs of obtaining and fulfilling franchise contracts under ASC 340-40 and recognize franchise revenue under ASC 606 (including the industry guidance in ASC 952-606).
Key points (5)
- All content of this subtopic, including 340-952-05-1, 340-952-15-1, and 340-952-25-1 through 25-3, was superseded by Accounting Standards Update No. 2014-09.
- No extant recognition, scope, or overview guidance remains in ASC 340-952; it carries no current accounting requirements.
- Costs incurred by a franchisor to obtain and fulfill a franchise contract are now evaluated under ASC 340-40 (incremental costs of obtaining a contract and contract fulfillment costs).
- Franchise fee revenue (initial fees, area development fees, continuing royalties) is recognized under ASC 606, with franchisor-specific application guidance in ASC 952-606.
- Legacy franchisor cost-deferral practice that matched direct costs against unrecognized franchise fee revenue is no longer authoritative GAAP.
For students. This subtopic is a shell — its only exam-relevant fact is that ASU 2014-09 wiped out the old franchisor cost-deferral rules. The common mistake is citing legacy franchise accounting (deferring direct costs until the franchise opens) instead of applying ASC 340-40 and ASC 606/952-606.
Machine-generated study aid for ASC 340-952. Check the source paragraphs below.
340-952-00Status
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| Paragraph | Action | Accounting Standards Update | Date |
| Franchisor | Superseded | Accounting Standards Update No. 2014-09 | 05/28/2014 |
| 952-340-05-1 | Superseded | Accounting Standards Update No. 2014-09 | 05/28/2014 |
| 952-340-15-1 | Superseded | Accounting Standards Update No. 2014-09 | 05/28/2014 |
| Superseded | Accounting Standards Update No. 2014-09 | 05/28/2014 |
340-952-05Overview and Background
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340-952-15Scope and Scope Exceptions
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340-952-20Glossary
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340-952-25Recognition
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